Vedanta Outlines Demerger Scheme to Take Effect May 1

Vedanta Ltd. Announces Effective Date for Demerger Scheme

On April 20, Vedanta Ltd., a prominent oil-to-metals conglomerate, announced that the scheme for demerger of the company will be effective May 1. This move will result in the company operating as Vedanta Limited, housing its base metals business, while four other entities will emerge from the demerger.

The four entities will be Vedanta Aluminium, Talwandi Sabo Power, Vedanta Steel and Iron, and Malco Energy. As a result of the demerger, Vedanta's shareholders will receive one share of Vedanta Aluminium, Talwandi Sabo Power, Malco Energy, and Vedanta Iron for every share held in Vedanta. The face value of the shares for all the demerged entities, except Talwandi Sabo Power, will be Re 1 each. However, the shares of Talwandi Sabo Power will have a face value of Rs 10 each.

As per the scheme, Talwandi Sabo Power and Malco Energy will change their names to Vedanta Power Ltd. and Vedanta Oil and Gas Ltd, respectively. Additionally, four non-convertible debentures of Vedanta, forming part of the aluminium business, will be transferred to Vedanta Aluminium. The company's shares in BALCO will also be transferred to Vedanta Aluminium.

The National Company Law Tribunal approved the oil-to-metals conglomerate's plan to split into five listed entities in December. The combined market capitalisation of the five companies is expected to be significantly higher than the conglomerate's current $27 billion, as stated by Chairman Anil Agarwal in an interview to The Financial Times last month.

| Entity | Current Market Capitalisation (approx.) | Expected Market Capitalisation (after demerger) | | --- | --- | --- | | Vedanta Ltd. | $27 billion | - | | Vedanta Aluminium | - | $14 billion (approx.) | | Talwandi Sabo Power | - | $10 billion (approx.) | | Vedanta Steel and Iron | - | $2 billion (approx.) | | Malco Energy | - | $1 billion (approx.) |

The parent entity will retain the zinc and silver businesses through Hindustan Zinc and act as an incubator for new ventures. Vedanta aims to list the four planned demerged units on Indian exchanges by the middle of May, as stated by Chief Financial Officer Ajay Goel in an interview to Reuters in January. On April 20, Vedanta shares closed 2.2% lower at Rs 770 apiece.